tv First Business FOX September 2, 2010 4:30am-5:00am EDT
manufacturing numbers could mean there's hope for the economy but market pros are still skeptical about future growth plus social security is a hot topic we'll hear what some americans have to say about privatization. and what businesses can do to protect against cyber crimes it's all ahead on today's first business. thursday sept. 2nd 2010 you're watching first business: financial news, analysis and today's investment ideas. good morning everybody it is thursday september 2, 2010. we just saw a big jump in the stock markets on wednesday but the question is does it have room to run. especially ahead of that important jobs number coming out on friday and we have known to be disappointed by that jobs number. we will have to just see. that is very true. we have news coming in from the tech world and apple. steve dobbs is talking about this apple tv device that will actually stream videos to a device for 99¢ so you can watch your favorite shows. and burger king is thinking about putting itself up for sale. the stock
has been really ramping up that should be interesting. some disappointing news in the labour market we have seen a really bad trend with wage growth. the u.s. labor market has seen a broad base collapse of wage growth over the last two years. the hot button topic of social security has people talking.in chicago protestors against privatizing social security and members of the tea party movement voiced their views.while stumping at a political fundraiser for a tea party candidate republican congressman paul ryan- talked to the crowd about moving medicare and social security away from full government control. " it's not to say i got it all figured out here all the only ideas it is to say
america it is not too late to fix these problems it is not too late to turn the corner health retirement security while paying off our national debt making the next generation better off." outside demonstrators showed signs of fear that a government that would put social security in the hands of wall street would be creating a huge risk." this is my understanding that the federal law states that a the first obligation is to the shareholders so if they take over social security they would not have any obligations to little 'ol people like me. "also troubling to protestors-- ryan's high ranking position in congress. "he's no back bencher he is on the top republicans on the budget committee. and if he had his way with his road map to america's future it would lead to privitization of social security, it would lead to benefit cuts, he also wants to
raise the retirement age. 5:06 we don't need to do those things to strengthen social security. " and, with the mid term elections just about 2 months away and control of congress hanging in the balance republicans and democrats are both picking up the pace in their rhetoric.just as controversial earlier this week democratic senator dick durbin spoke about raising the social security tax cap so americans in the highest tax bracket are paying more.it's easy for those who work behind a desk to say raise the social security workjing to 70 not bad but there are people on the feet all day-- manual labor.as congressman paul ryan continues his tour to promote privatizing social security democrats will likely be out telling americans that social security is secure for the next 27 years.
waldock. are we seeing a bottom in the stock market right now? right now does loolike we have a near-term bottom. wednesday's numbers gave us a real shot in the arm to the upside. the manufacturing numbers were better than expected. those numbers give the idea that perhaps we are in some type of recovery. i also think this market is looking for any kind of excuse to rally. if we get better than expected data today and on friday's jobs market numbers you may see some follow-through. i will also temper that though with the late volume trade. the big traders won't be back till next week sometime so that's when we may pick a direction. the institutional traders come back in the market next week and then how are you anticipating your approach to the market from here on out in september and october? any trade above the 200 day moving average around 1100 in the s&p would be good for me. i have been selling these rallies here in the last three weeks on bad news. if we hit a bad number i sell the market.the market has been selling off nicely. i think
this is a little bit different though. on wednesday the market rallied until close on the s&p's volume and then close on the high. so that is not what has been happening. it's all about the numbers today and then friday and if we get a little bit of follow-through into tuesday and wednesday with some volume we could set up for a little bit of a pop. so we close above that 200 average will that tell you to become bullish again? i am not bullish. i don't believe you have recovery unless you have jobs. and we do not have jobs. right now it's a traders market if the market did close above the 200 moving average i would probably be a short-term buyer. i would step out of the way if the market closed off. thank you for joining us richard ilczyszyn, lind-waldock. car sales hit the brakes last month.toyota, general motors, and ford turned in what's being described as the worst august
in 28 years.gm sales were off by 25% compared to august 2009 when the "cash for clunkers incentive was in place.ford sales wer down 11% and as for toyota, the world's largest automaker sales dropped 34% while ford's collapsed 14% chyrsler was the only gainer in the group with 7% jump up in sales compared to a year ago. still to come how to protect your business from cyber crimes but first are we really looking at the potential for a lost decade just like the japanese? one market pro weighs in on that question next.
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veteran's benefits to birth certificates, patent applications to energy saving eas, product recalls to home buying tips, check out usa.gov. because the country runs better when we stay connected. we have been getting mixed signals on the economy. many are expectg slower growth in the years ahead but the question s by how much? we e now joined by john bintz, valuation research corporation. are we looking at a mid cycle slowdown worse that a structural. if you look at the consumer which is 70 percent of our economy they have taken a huge hit. they have lost home worth as well as worth in their stocks. 66 trillion is now 47 trillion 19 trillionn
net worth assets have declined over the last three years. that's 28 percent of the consumer's not worth. let's ok at the near erm and the this week. it actually shows a continu expansion is that a good enough sign? i think it's good but not good enough. i think there are a lot of structural problems and we are just bouncing along the bottom. what kind of economic growth are we realiscally looking at over the next five years? th is a great question and my best guess would be between 2 and 2 1/2% over the next five years. each year. in aggregate for those five years acuumitively 2 to 2 1/2%. how far below the trend growth is that? aot of experts are saying three to 4% but i personally believe wit deficits and uncertainty and taxes growing higher we are going to see a lower growth
rate. what does this mean for job growth over the next five years? were expecting only 2 1/2 percent gdp growth annually. you needed at least 2 1/2% to get positive job growth so i think we are right on the margin unfortunately. so will we see jobs created then maybe at an anemic level? that is what i believe. that is not a good sign at all. no it is not. another thing you wanna look at is other countries. you look at some the emerging markets in brazil, china,and india. chais growing at a 10% clip. india is growing 8% clip. and brazil is growing at a 6 1/2% clip. those are not huge economies but china is now no. 2. i have read thathina may catch up and pass the usa gdp in the next 15 to 20 years. let's focus back on private sector hiring. it has
averaged 90,000 each month so far this year. why are companies not hiring? i think they are very cautious. some say they are a lot of uncertainties out there. financial regulation, what is going to happen with taxes, what is the effect of the health care legislation that has been passed. there are a lot of uncertainties. there are a couple things that are certain though. nothing is done and the bush tax cuts are not extended 39.6 top tax bract from 35%. top dividend tax rate 20% to 39.6. long-term capital gain 15 to 20%. health care costs are estimated between five to 10%. there is a real burden on small companies and middle-market companies. not necessarily the large markets
that may be able to pass on those costs to the consumer but the small and medium term companies are looking at their tax bills increasing. why would they want higher it? they want to make sure there is demand for their product or service that they are putting out. there is too much uncertainty right now and they do not like uncertainty. markets do not like it, ceos do not like it, and people who run industry do not like it. if congress extended the bush tax cuts would that give you a better read on the economic future? it would but i mentioned four and that was just one. dividend taxes are up and so our health care taxes. long-term capital gains taxes are also up. there is also a possibility of a carried interest which affects the private equity firms and venture-capital and leveraged buyout firms would inevitably
go up as well. are we looking a lost decade like the japanese? if you look at the past decade stocks are basically the same as they were 10 years ago. if you look at what happened to japan in what you just mentioned i could possibly see that occurring. some people say we are in a double dip but i do not think we got out of the original dip. i think that was built up in inventory with the manufacturing sector as well as government stimulus packages. how do we prepare for this as consumers? as far as investing is concerned and as far as work is concerned keep your nose to the grindstone and be focused. do what you do and be thankful you have a job. save money also. get out of debt. if your going to do equities i would not do them in the u.s.. pe ratios are 19 and the medium over history is 16 so we are not cheap in any way. if you are going to invest i would look at emerging markets. thank you for joining us john bintz, valuation research corporation.
are some examples of the security threats that companies are facing? there are a number of of them. there is cyber security which we see from foreign groups like china or russia. they look to disrupt a number of things and profit from it. a number of areas associated with data breaches is also high right now. and there are a number of other things occurring in regards to foreign entities. so who is behind these data breaches and what kind of information are they taking? and what are they doing with them? a data breach can be a number of things. the first thing you typically see in an external person coming in and actually grabbing information from records. a average backup tape of an environment may have 10,000 records on it 10,000 u.s. records are worth a lot of money on the black market. it is extremely profitable and you see a lot of organized crime going after it and a lot of foreign entities. we see a lot of records from china and russia. another one is a general misunderstanding of how we use secure data. inside a number of large organizations we
have had a number of data issues. the they are associated with sharing business information. because of that we are seeing a number of accidental losses that are also trained these data breaches. it is not always intentional but there is targeted text still occurring. what kind of stolen information is it? are we talking about credit cards and social security numbers? credit card numbers and social security numbers are very important and very common and probably the easiest to identify for a hacker. the bigger things are when someone comes for intellectual property. a example would be when you are going to release the next phone, how do we actually grab that data three months ahead and give us a pricing advantage. or actually mimic that model and come with something better. intellectual property is the most sophisticated but people are also looking for credit card numbers and social security numbers. what is the cost to companies that lose their information through this? the largest one i seen recorded was $31 million and that was in one instance. they were about a
hundred thousand records lost. we also see the ip loss that is occurring and that can be in the millions or even up to a billion dollars. if you give someone the information to develop the next-generation car ahead of time by compromising that information that is a big head start and a lot of money you can lose. the federal government is actively trying to help companies crack down on this problem what are they trying to do? they are initiating a number of programs the private citizen being one of them. the basic concept is that they're trying to protect and centralize key information and understand what's occurring in large organizations. utility companies are a great example there is energy there that is very important to us so they want to make sure nobody is coming in and trying to take advantage of these energy companies as well as utility companies so they are trying to provide a centralize monitoring intelligence for these organizations so they can see things happening at a broader
scale and report them and hopefully collaborate with some of the security companies as well the larger organizations that are important to the united states to share that data so they can do something more proactively. this is just a cost that companies have to deal with these days. thank you very much for joining us jeff sizemore / forsythe. and still to come in the show,a bullish look at the markets with dan deming after this break. it was more surreal than anything. you're under fire. you're getting blown up. there's definitely adrenaline. there was the explosion, and i remember just opening my eyes, and it got both of my legs. i had surgery after surgery, you know, i was on a lot of pain medicine.
"what's going to happen next? and how long am i going to be here?" the wounded warrior project dropped off a backpack for me. and it had everything in there that i could possibly have needed at that time. peer visitors, people who have been where i had been before, said, "look, brother, "everything's going to be okay. "three months from now, or four months "from now, a year from now, you'll be fine." that type of thing was an invaluable service. to be honest, i don't know if i would be as well adjusted as i am now if it wasn't for them. to learn more, call... or visit woundedwarriorproject.org.
we are now joined by dan deming/stutland equities. what do you make of the rally yesterday? it was the culmination of a few things. oversold conditions, a very bearish sentiment in the market, and the fact that the market held at the 1040 level for the third time in five days. all those things came together to push the market high initially during the day and then when we got the ism number the market really took off because the news did not show further declines in the economy. what signals are you seeing in the market right now that perhaps this rally does have some legs? yesterday we certainly saw some repositioning going on in the vicks for the volatility expectations going into september and october. we saw put buyers at the 24 25 strikes in september and the 27 and 30 strikes in october. that leads
you to believe that some people may be positioning for the market to hold these levels. or at least trend a little bit higher and volatility will be under pressure. if i know anything about you options traders you tend to be contrarians. while the rest of the world seems to think the market will head higher what is your view? i am still not convinced we will need to see more out of this market. i can tell you short-term that we have seen this market break that down trend it was then all through august this is a significant jump up. we had a series of higher highs and lower lows but we are now seeing the market break that for the first time. we are resting right on the 50 moving average in the s&p 500 index and the russell also just below the 50 day moving average so we definitely could see a potential for more upside now that we have broken that august trend. so an upside coming from you. just have to point that out because i know you are a little bearish. thank you for joining us dan deming/stutland equities. and that's all for today's show.
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